Daphne Same Store Sales Showed "Negative Growth"

　　 Daphne 2014: core brand store sales fell by 3.4% year-on-year. In the 2014 quarter of fourth, the same store sales of core brands decreased by 7.5% and 3.4% respectively. The poor performance of the same store is mainly due to the weak atmosphere in the women's shoes market, the fierce competition in the market and the fact that the sales of the physical distribution shops have been shared by the network sales. We predict that the revenue of the 2014 core brand business will be basically equal to HK $9 billion 490 million last year. In addition, we believe that 2015 and 2016 core brand business revenue will increase by 9% and 9.7%, respectively, to HK $10 billion 400 million and HK $11 billion 400 million respectively.

2014 Stock The situation has been improved. Due to online and offline Sales promotion We think that the inventory situation in 2014 has been greatly improved. However, we believe that the company's inventory clearance activities will continue in the first half of 2015. Our Forecast Ltd's 2014 to 2016 inventory turnover days are 188 days, 175 days and 169 days respectively. We believe that our Forecast Ltd's gross profit margin will drop by 2.9 percentage points to 53% in 2014 as a result of greater discount in inventory clearance. We also predict that the gross margins of 2015 and 2016 are 55% and 56.5% respectively.

Core brand businesses focus on the development of Direct stores. In 2014, the company opened 257 core brand outlets and closed 174 franchises. By the end of 2014, the number of core brand stores in the company was 6402, including 5748 Direct stores and 654 franchised stores. We believe that the company will also focus on the development of Direct stores in the future, which will be more conducive to the management of inventory and the improvement of single store efficiency.

Maintain buy rating. We reduced the net profit of Forecast Ltd in 2014, 2015 and 2016 in the fiscal year by 39.5%, 20.8% and 13.2% to HK $150 million, 420 million and 780 million respectively. The company's current stock price is equivalent to 12.7 times and 6.9 times earnings per share in fiscal year 2015 and fiscal year 2016. We maintain Daphne's "buy" rating. The target price is HK $4.2, which is equivalent to 18.9 times earnings in 2015 fiscal year, and is also the average price earnings ratio of the company in the past 3 years.

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The performance of Hai Lan home brand continues to grow rapidly. The company's current report is from Hai Lan's home and keno technology, and its net profit is mainly composed of the following three parts (all estimated): 1, the original business of Hai Lan's home is about 2 billion 40 million yuan, up 51% from the same period last year; 2, the technology business of Keno is about 190 million yuan, up by 31% percent compared with the same period last year; 3 yuan and 3-9 yuan of non recurring gains and losses brought about by the reorganization of the company in 2014. The company's circulation chain is extremely flat and efficient, and the increase rate is much lower than other brands. The fashionable and cost-effective products meet the current rational consumption trend, and the performance continues to grow rapidly.

Endogenetic extension two wheel drive, 2015 high growth can still be expected: 1, the company stores mainly concentrated in East China and two or three line cities, there is still much room for extension expansion; 2, same store growth, the company implemented the big store strategy, and promoted the development of the "Hai Lan home + love rabbit + 100 clothing" brand linkage shop, and the development of the "two seas one brand" linkage store, upgrading the store's rate and customer price through the channel upgrade; 3, the company adjusted the way of sharing with the franchisee, compared with the old mode, with the growth of single store sales revenue, the company will get more income and thicker profits. We are optimistic about the company's unique business model and the positioning of the national brand with high cost performance. We expect to maintain a growth rate of about 30% in the next two years.

Maintain strong recommendation rating: the company's 2014-16 year operating income is 127.7, 167.8 and 21 billion 440 million yuan, up 49.9%, 31.4% and 27.8%, respectively. The net profit attributable to the company is 23.6, 32 and 4 billion 130 million yuan respectively, corresponding to EPS 0.53, 0.53 and 0.53 yuan respectively. The company's business model is flat and efficient, and its product cost performance is high. It fits the current market demand, giving it 20.5 times PE in 2015, and the target price is 14.56 yuan.